Budget 2012: Parker chooses 'low-growth' attack

David Parker. Photo / Mark Mitchell

If Labour has one ambition this week, it is to shift the political spotlight away from a cheery surplus in three years' time to accentuate the negative.

Finance spokesman David Parker did that yesterday with the GDP growth figures he produced in his first major speech since gaining the role five months ago.

He claimed that in the last three years, New Zealand's GDP had grown just 0.6 per cent.

However, two leading economists, Cameron Bagrie of ANZ, and Tony Alexander of BNZ, both came up with the same figure of 1.5 per cent when asked by the Herald what New Zealand's GDP growth had been.

There are various ways of measuring GDP growth, and Mr Parker's advisers arrived at his figure by comparing the cumulative economic activity from each quarter in 2008 with the same figure for 2011, claiming it was standard practice at the parliamentary library.

The economists compared the December quarter in 2008 with the same quarter in 2011.

The point Mr Parker was attempting to make was that the level of economic output last year was only fractionally higher than it was in 2008, and of that there is no dispute.

His message is also that after three and a half years at the helm, anaemic growth can be sheeted home to National instead of Greece.

Getting the issue of economic growth on to the political agenda is Labour's aim this week.

"The Government cannot claim that a successful economy is one that isn't growing," the finance spokesman said in a speech yesterday.

He is not expecting significant change in tomorrow's Budget, at least "not change capable of making a lasting difference to our growth rates".

"Change nothing and nothing will change," he said. "But don't blame Greece."

Mr Parker's job is a difficult one. From his relatively low profile, he has to emerge as a trustworthy alternative to Finance Minister Bill English by the next election, and rewrite the party's economic policy along fiscally responsible lines.

Mr Parker's job is more difficult because he has to compete against some seasoned operators in the Opposition.

Greens co-leader Russel Norman is strongly staking out economic issues, and a former Treasurer, New Zealand First leader Winston Peters, is as vocal as ever.

One of Mr Parker's toughest challenges is to rid Labour of the borrow-and-spend baggage that plagued it at the last election.

The party's renouncement of its policy to borrow billions to pay into the co-called Cullen superannuation fund was such a start on that path.

By its own calculation, it accounted for 70 per cent of the extra debt in Labour's fiscal programme last election, debt that left it open to constant attack by National.

Labour has now accepted that New Zealanders have an aversion to more debt.

Mr Parker said yesterday that until the country got back to surplus - it has the same 2014-15 target as National - Labour would pay for any new spending or tax cuts out of existing budget provisions, new revenue or by reprioritising.

Mr Parker gave notice that Labour intends to smash a few orthodoxies along the way.

It has already done so in two areas by sticking with a capital gains tax and a rise in the pension age from 65 to 67 by 2033.

Leader David Shearer kicked off Budget week opening up the debate on the super age, part of a strategy to show Labour would be willing to make unpopular decisions for the good of the country.

Mr Parker also highlighted it in his speech saying that within three years, the Government would be spending more on superannuation than on all education combined - pre-school, primary, secondary and tertiary.

"The sooner the age of entitlement for superannuation is tackled, the easier the adjustment will be," he said. "It's another instance of the Government not being willing to take the big decisions and chuck out some of these old orthodoxies that we need to overthrow in order to get ahead."